Informist, Thursday, Nov 30, 2023

By Krity Ambey

NEW DELHI – The terms of reference for the 16th Finance Commission have not mentioned any census year, which will form the basis for the commission's recommendation on devolution of taxes to states, a finance ministry official said.

"It is a strange situation where we did not mention any population census in the ToR (Terms of Reference)," the official told Informist.

The Cabinet approved the terms of reference for the 16th Finance Commission on Tuesday, the government said on Wednesday, without giving the details of the approved terms.

In the terms of reference for the 15th Finance Commission, the government had said that the commission will use the census for 2011 instead of the earlier practice of using the 1971 census. All the finance commissions since the 6th Finance Commission have used the 1971 census.

For the 16th Finance Commission, the 2021 census would have been used had it not been hindered by the COVID-19 pandemic, the official said.

"Given a scenario where latest census is still not available, it has to be seen which census will be taken." The final decision on reference census may be taken later when the commission is constituted, the official said.

The government is in the process of constituting the 16th Finance Commission that will submit its report on the layout of Centre-state financial relations for five years starting 2026-27 (Apr-Mar), by Oct 31, 2025.

The decision to use the 2011 census for the 15th Finance Commission was controversial as many states in south India said they have been punished for controlling population.

The 15th Finance Commission gave its recommendations on tax devolution based on the 2011 population data with 15% weight on the parameter of population of the states and 12.5% weight on demographic performance criterion. Other parameters included income distance, area, forest and ecology and tax and fiscal efforts.  End

Edited by Maheswaran Parameswaran

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